by It became known how much cars from America could become more expensive, and most importantly, when and why. But let’s start with the fact that the demand for cars from the USA is growing in Ukraine every year. According to open data from the State Customs Service of Ukraine, in 2017 the volume of deliveries slightly exceeded 6,500 cars, by 2020 this figure reached 65,000 cars, and in 2021 it even exceeded the mark of 71,000 cars.
The main advantage of purchasing a car from America lies in the low cost of the car itself at the auction due to the presence of damage. As a result, the size of customs payments is also reduced.
As a result, even with additional costs in the form of auction fees, delivery, and repairs, the final cost still does not exceed the average market cost of a car in Ukraine. However, by the end of 2022, this could end due to some changes and complexities. As a result, cars from the USA will lose their main advantage – significant savings compared to other ways of acquiring cars in Ukraine.
Experts from W8 Shipping, the largest supplier of cars from America to Ukraine, which managed to deliver more than 31,000 used cars to our country in 2021, talked about the possible problems that could lead to an increase in car prices from the USA.
W8 Shipping highlights several factors that could dramatically change the American car market. The so-called trade war between America and China is to blame. Starting on January 23, 2018, then-President of the United States, Donald Trump, began introducing a series of taxes on the import of goods from China. By the middle of the year, China began responding by imposing customs duties on products from the states.
However, the main problem began to appear closer to 2020, when the Covid-19 pandemic affected the whole world. It was from this moment that more serious manifestations of hostility between the states began. They affected many areas, but now we will raise only the issue directly related to the cost of American cars in Ukraine.
Why might cars from the USA become more expensive?
Starting with the partial exit of the world from lockdown, the port system in the USA began to suffer seriously. Several factors influenced it. First of all, there is a lack of human resources, which were reduced during the lockdown and did not have time to recover. Now, to add to all this, the outbreak of the Omicron virus also led to a reduction in staff. As a result, serious delays began in the largest ports of America, which, by the way, still exist to this day.
If we talk about more significant reasons, the shortage of cargo containers played a significant role here. The fact is that 98% of the world’s total volume of containers is produced in China, 82% of which are accounted for by the 3 largest enterprises. Today, all of them have significantly reduced production volumes to increase the market value of one container. This has created a slight deficit.
Along with this, Chinese companies that supply their goods to the US began offering higher shipping costs to America. It wouldn’t be much, but at some point, their offer became so attractive to shipping companies that it became profitable for them to ship an empty container to China and then return it with goods back to the USA.
This fact influenced the policies of many shipping lines, which reoriented their main ships towards China. Meanwhile, today, the epidemiological situation in China also made its adjustments to the work of ports, leading to breakdowns in ship loading schedules.
In US ports, large queues of container ships continue to accumulate, which simply do not have time to unload and load on time. As a result, the American side decides to hold an unloading auction. In simple terms, the ship that pays more for unloading enters the terminal. Considering the volumes of deliveries and the profitability of ships arriving in the US from China, it is not difficult to guess who gets priority.
And now, gradually getting to the point, we can already forecast today which way the cost of cars from the USA will move if all this commotion continues to develop in the same direction.
First of all, we are facing a serious delivery delay. The ships loaded in the European direction can simply be asked to leave the terminal unloaded, as a large ship from China needs to be unloaded, only after which the process can be completed. As for the logistics of cars across the US, it is structured such that if a delay occurs at some stage, all other processes also stop. Despite the fact that each of the 6 W8 Shipping sites can accommodate up to 1,500 cars, if they are not shipped on time, the sites simply become overcrowded.
From here arises the first reason for price increases, which is the so-called “storages” of auctions – daily charges for idle vehicles, which simply have nowhere to be retrieved due to port delays.
The next reason for the increase in car prices is the rise in delivery costs. It all lies with the shipping companies. Since delivery costs much more in China, many major players have shifted all their efforts there. Thus, the remaining ones got the opportunity to work practically without competition, which allows them to dictate new delivery prices. This also includes the shortage of containers, which also affects the final price of shipping a car.
In addition to this, due to the economic crisis in America, car transportation costs are gradually increasing. This also affects insurance auctions, which have already raised auction fees several times over the past two years.
The cherry on top of this whole saga is the growing global demand for used cars. Not only is the number of buyers from all over the world wishing to purchase a unique American car increasing at US auctions, but Americans themselves are also becoming more willing to buy cars with minor damages. As you might guess, given the lack of expenses like transportation, customs clearance, certification, brokerage services, and others, US residents can offer a much higher bid for a car at the auctions.
Moreover, insurance companies themselves are now evaluating cars much more carefully, sending more and more “living” cars for repair and resale, whereas a year ago, almost every car was written off indiscriminately and went under the hammer.
When might this happen?
W8 Shipping states that a drastic price increase is not expected before the end of this summer thanks to a series of timely actions taken. However, if this situation is not resolved by the end of 2022, in 2023 the cost of a car from the USA will strive towards the market value of used cars in the country’s domestic market. And this means only one thing – used cars in Ukraine may follow the same path of rising prices as the secondary markets of many countries, including America itself.
To convey the current cost of cars to buyers, the W8 Shipping company website has placed current prices for most models that can be ordered from the USA. This allows you to easily choose a car for your budget without needing the help of experts. It also includes calculations for delivery and customs clearance for each specific car.
